Piedmont Natural Gas more than doubled its net loss for its fiscal fourth quarter, but reported a 28% increase in net income for the year ending Oct. 31 to $95.2 million, or $1.27 per diluted share, which includes $4.6 million, or $0.06 per diluted share, for one-time items. The weather for the year was 9% warmer than 2003, and 5% warmer than normal, but the company’s purchase last year of North Carolina Natural Gas (NCNG) contributed to improved margins and throughput.
Its seasonal fourth-quarter loss was ($12.5 million), or ($0.16) per diluted share, compared with a loss of ($5 million), or ($0.07) per diluted share, for the prior-year fourth quarter.
NCNG, which was bought on Sept. 30, 2003, coupled with continued customer growth across the company’s three-state market area led to substantial throughput increases for both the quarter and the year. Total system throughput for the year was 201.3 million decatherms, compared with 149.3 million decatherms for the previous year. Throughput for the fourth quarter totaled 34.1 million decatherms, compared with 25.3 million decatherms for the previous year’s quarter.
The NCNG acquisition also contributed to margin increases for the year and quarter of $105.5 million and $14.4 million, respectively. Operations and maintenance expenses for the year and quarter also increased, however, primarily due to the acquisition of NCNG.
“We had an outstanding year in 2004, primarily as a result of our opportunistic acquisition of NCNG and the strategic restructuring and operating performance of our joint venture, non-utility activities,” commented CEO Thomas E. Skains. “Our strong non-utility earnings enabled us to fund the Piedmont Natural Gas Foundation which will provide valuable assistance to qualified charitable agencies and organizations where our employees live, work and provide service to our customers.” The current year and quarter include a $7 million accrual for the initial funding of the foundation.
The company’s interest in SouthStar contributed $11.9 million to net income for fiscal 2004 and $0.4 million in the fourth quarter, compared with $6.4 million and $0.7 million for the same periods of the prior year. Two other joint ventures, Pine Needle LNG and Cardinal Pipeline, contributed combined net income of $3.5 million for fiscal 2004 and $0.9 million in the fourth quarter, compared with $3.1 million and $0.7 million for the same periods of fiscal 2003.
Piedmont recently initiated a cost cutting initiative across its three-state operating area with process improvement programs, including consolidating customer call centers and regional business offices, automating meter reading functions, and consolidating smaller local business offices. The company will implement the initiatives on a phased-in schedule over the next two to three years.
“We are keenly focused on continuous business process improvement and operating our gas distribution systems as efficiently and cost-effectively as possible,” Skains said. “At the same time, we are determined to enhance and improve customer service and satisfaction which has never had a greater importance in light of current market conditions in our industry.”
Piedmont reaffirmed its earnings guidance for 2005 in the range of $1.23 to $1.30 per diluted share. The guidance assumes normal weather, a relatively stable economy and wholesale natural gas prices in the range of prices that prevailed during fiscal year 2004. Piedmont delivers gas to 940,000 residential, commercial and industrial utility customers in North Carolina, South Carolina and Tennessee, including 60,000 customers served by municipalities who are wholesale customers.
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